457 Plans Those Other Deferral Plans

1. 457 Plans �Those Other Deferral Plans Joann Albrecht, CPC, QPA Nationwide Financial ASPPA Annual Conference November 3, 2009

2. Terms Used Government Plans- plans of state or local government and any of their subdivisions, agencies and instrumentalities Tax exempt- plans of tax exempt organizations, excluding churches and governments

3. A 457 Plan is a �Nonqualified" deferred compensation plan is a plan maintained by an eligible employer and subject to the rules of �457 and its regulations. A 457 plan may cover employees and/or independent contractors 457 doesn�t apply to plans of churches and qualified church controlled organizations as defined under IRC 3121(w)(3) A and B 457 doesn�t apply to plans of churches and qualified church controlled organizations as defined under IRC 3121(w)(3) A and B

4. Types of 457 Plans Two types Eligible Plans- 457(b) Ineligible Plans- 457(f) 457 plans that don�t meet the requirements of 457(b) by design or default and Used by both government & tax-exempt employers Recent survey by NAGDCA which included 69 state and local government plans represented assets of approximately $61 billion; largest state plans are OH, NY, CA, NYC, LA County and City of Los Angles Most are defined contribution plans 457(f) plans must still be established by eligible employers may be 457(f) plans either by default or design 457(f) participants may be subject to 409A Recent survey by NAGDCA which included 69 state and local government plans represented assets of approximately $61 billion; largest state plans are OH, NY, CA, NYC, LA County and City of Los Angles Most are defined contribution plans 457(f) plans must still be established by eligible employers may be 457(f) plans either by default or design 457(f) participants may be subject to 409A

5. Eligible Sponsors State and local governments their agencies and instrumentalities, including the District of Columbia Tax exempt organizations Under Subtitle A of the IRC Most are 501(c) organizations

6. 457 Does Not Apply to Plans Of Private sector taxable employers The Federal government and its agencies and instrumentalities Churches and qualified church controlled organizations

7. 457 Plans Are Not Qualified, 403(b) SEPS and SIMPLEs Bona fide vacation/sick leave, compensatory time, severance pay, disability or death benefit plans Length of service award plans (LOSAPS) Non elective plans for Non employees Church Plans with some exceptions 415(m) governmental excess plans Some early retirement window programs Exclusions from 457 found under 457(e)(11) LOSAP- Length of Service Award Plan- for volunteer firefighters , EMTs , ambulance and prevention services can contribute up to $3,000 year on their behalf. My be structures as either a defined benefit or defined contribution plan. Non church, non QCCOs are subject to 457� universities, publishing houses, nursing homes etc. LOSAP primarily plans for volunteers ( firefighters) who receive nominal fees, not to exceed $3,000 annually for their services. Qualified services defined as firefighting and prevention services. EMS and ambulance services. Window programs for teachers Payments made or supplements to early retirement benefits, Such payments or subsidies are made in coordination with a DB plan maintained by a local educational agency or educational association. Exclusions from 457 found under 457(e)(11) LOSAP- Length of Service Award Plan- for volunteer firefighters , EMTs , ambulance and prevention services can contribute up to $3,000 year on their behalf. My be structures as either a defined benefit or defined contribution plan. Non church, non QCCOs are subject to 457� universities, publishing houses, nursing homes etc. LOSAP primarily plans for volunteers ( firefighters) who receive nominal fees, not to exceed $3,000 annually for their services. Qualified services defined as firefighting and prevention services. EMS and ambulance services. Window programs for teachers Payments made or supplements to early retirement benefits, Such payments or subsidies are made in coordination with a DB plan maintained by a local educational agency or educational association.

8. 457 Plans Are Used As Supplemental plans DB plan primary plan for gov�t employees 401(a)+ 457(b)+ 457(f) Social security replacement plans-gov�t Top hat plans for tax exempt employers 401(a)/403(b)+457(b) + 457(f) DB plan usually traditional plan but some public employers are now using a hybrid DB plans Social security replacement plans are used in lieu of covering employee groups under social security� used most commonly for temporary part-time and seasonal employee who are unlikely to qualify for social security coverage. Medicare taxes still apply. 457 plans can be used with qualified plans, 403(b) plans, if applicable, and ineligible 457 plans. DB plan usually traditional plan but some public employers are now using a hybrid DB plans Social security replacement plans are used in lieu of covering employee groups under social security� used most commonly for temporary part-time and seasonal employee who are unlikely to qualify for social security coverage. Medicare taxes still apply. 457 plans can be used with qualified plans, 403(b) plans, if applicable, and ineligible 457 plans.

9. Background Prior to enactment of 457 in 1978: No distinction between deferred compensation plans of taxable and tax exempt employers 457 originally applied to government employers Applies to tax exempts since 1986

10. Background 457 limited deferrals to $7,500- reduced by deferrals to other plans Gov�t employers could not adopt new 401(k) plans after May 6, 1986 Governments can continue to maintain existing 401(k) plans examples of governmental 401(k) plans include KY, CA NC, MD and AZ. Governments can continue to maintain existing 401(k) plans examples of governmental 401(k) plans include KY, CA NC, MD and AZ.

11. SBJPA $7,500 deferral limit indexed Governmental 457 plans Required to hold assets in a trust for exclusive benefit of employees Participant loans permitted Deferrals to other deferral plans such as 403(b) and 457 plans reduced 457 dollar limit. Gov�t 457(b) plans- assets must be held in trust- result of Orange County bankruptcy in 1990�s Deferrals to other deferral plans such as 403(b) and 457 plans reduced 457 dollar limit. Gov�t 457(b) plans- assets must be held in trust- result of Orange County bankruptcy in 1990�s

12. EGTRRA 457(b) deferral limits same 401(k) No deferral coordination with non 457 plans Gov�t 457(b) plans enhance benefits for police and firefighters Tax-exempts 457(b) plans retain many pre- SBJA-EGTRRA features

13. Recent Legislation & Guidance Affect primarily gov�t 457(b) plans PPA,HEART,WRERA, ARA EACAs Rollovers to Roth IRAs Rollovers for non spousal beneficiaries RMD Waiver for 2009

14. Requirements of a 457(b) Plan Plan must be in writing Can be designed as a DB or DC plan Must include requirements for participation, contributions and limits, distributions and form of benefit payments Plan may have optional provisions Must comply in form and operation

15. Eligible Participants Employees Deferral agreement must be completed prior to the beginning of the calendar month deferrals begin Independent contractors No other plan permits independent contractor participation. Could be problematic for government plans, ERISA definition of government plans refers to employees. Beginning in 2010 governments will have to withhold 3% on payments they made to independent contractors. No other plan permits independent contractor participation. Could be problematic for government plans, ERISA definition of government plans refers to employees. Beginning in 2010 governments will have to withhold 3% on payments they made to independent contractors.

16. 457 Plans & ERISA Title 1 of ERISA Title I does not apply to any governmental plan-401(a), 401(k),403(b) or 457 plan Top hat exemption limits ERISA reporting requirements for Tax Exempts Otherwise if plan funded will be subject to all ERISA requirements- problematic. Otherwise if plan funded will be subject to all ERISA requirements- problematic.

17. 457(b) Characteristics Crucial to know if employer is gov�t or tax exempt Government Plans May cover all or some employee groups Funded Exclusive benefit rule applies Assets held in trust and protected from creditors Governmental 457(b), funded primarily with employee elective deferrals. Deferral limits are same as 402(g) limits but 457 plans are not subject to 402(g) Governmental 457(b), funded primarily with employee elective deferrals. Deferral limits are same as 402(g) limits but 457 plans are not subject to 402(g)

18. 457(b) Characteristics Tax Exempt Plans Limited to select group of highly compensated & management employees Unfunded plan � may use a Rabbi trust but assets are subject to employer�s creditors Treated as Top hat plans 457(b) plans for tax exempts have not changed as much as the gov�t plans, do have the same deferral limits as the government plans. HCE definition not the same as the one found under IRC 414(q)- No definition provided under ERISA for this purpose,457(b) plans for tax exempts have not changed as much as the gov�t plans, do have the same deferral limits as the government plans. HCE definition not the same as the one found under IRC 414(q)- No definition provided under ERISA for this purpose,

19. Sources of 457(b) Contributions Employee pre-tax elective deferrals No Roth elective deferrals or employee after tax contribution permitted Differential wage payments may be contributed plan for active duty military personnel- gov�t plans Employer contributions

20. Automatic Enrollment Available to 457(b) plans EACA applies to gov�t plans Not used much Many gov�t plans already require mandatory contributions to DB plan or DC plan If they were used they are generally subject to the same rules as private sector plans. If they were used they are generally subject to the same rules as private sector plans.

21. Contribution Limits 457(b) Contribution Limit Same limits as 401(k) and 403(b) deferrals Not reduced by deferrals to 401(k), 403(b) , SARSEP & SIMPLE plans Reduced only by deferrals to other 457(b) plans All 457(b) plans of employer treated as one plan 457(b) deferrals not subject to 402(g) limit, but limits are now the same and indexed the same. 457(f) deferrals taxed when contributed; might be a good idea because Bush tax cuts are expiring this year. Usually tied to an employer contributions so deferrals aren�t taxed when made. 457(b) deferrals not subject to 402(g) limit, but limits are now the same and indexed the same. 457(f) deferrals taxed when contributed; might be a good idea because Bush tax cuts are expiring this year. Usually tied to an employer contributions so deferrals aren�t taxed when made.

22. Contributions- 457(b) BEWARE Employer contributions are treated as elective deferrals and reduce deferral limits when they vest May be subject to FICA taxes Employer contributions are usually not made to eligible 457 plans Matching and non elective contributions often made to 401(a) plan Trap for gov�t plan not all employers covered under FICA, but most are subject to Medicare taxes. Matching and non elective contributions often made to 401(a) plan Trap for gov�t plan not all employers covered under FICA, but most are subject to Medicare taxes.

23. CATCH-UP CONTRIBUTIONS Special 457(b) catch-up - 457(b)(3) Applies to all 457(b) plans Requires under deferrals in prior years to current employer�s plan Available in the last 3 years before the tax year participant reaches plan�s normal retirement Age (NRA) Participant does not have to retire at NRA but must cease making special catch-up contributions All 457 plans of the employer must have the same NRA because all 457 plans of the employer are treated as one 457 plan.All 457 plans of the employer must have the same NRA because all 457 plans of the employer are treated as one 457 plan.

24. NRA When employee is eligible to receive unreduced benefit from the employer�s DB plan or money purchase plan if no DB plan NRA can be age 65 but no later than 70 �, or Special rule for Police and Firefighters NRA can be as low as age 40 Plan may permit employees to set their own NRA between a range of ages from 65 to 70 �. Plan may permit employees to set their own NRA between a range of ages from 65 to 70 �.

25. Special 457 (b) Catch-up Limit Maximum Special Catch up limit is the lesser of: 2 X the annual limit for the year as indexed, or The sum of annual deferral limit plus unused deferrals from prior years. Maximum limit for 2009- $33,000

26. Catch-up contributions (cont.) CAUTION Special 457 catch-up is on an employer by employer basis. Employee can�t use under deferrals in another employer�s 457 plan when calculating catch-up amounts Use old 457 rules to calculate pre-2002 under deferrals Can�t count under deferrals with other employer�s plans Cannot count under deferrals in other employer�s 457 plans or years when employer did not sponsor the 457 plan. Recordkeeping- some ppts. Can�t stop making special catch-up contributions, need to track this limit; Can�t count under deferrals with other employer�s plans Cannot count under deferrals in other employer�s 457 plans or years when employer did not sponsor the 457 plan. Recordkeeping- some ppts. Can�t stop making special catch-up contributions, need to track this limit;

27. Age 50+ Catch-up Gov�t 457(b) plans only Not coordinated with 401(k)/403(b) Age 50+ catch-up Can�t use special 457 catch-up and Age 50+ in the same year Use the form of catch-up that produces the highest result

28. Application of IRC 415(c) Limits 457(b) plans use 415(c)(3) definition of includible compensation but Are not subject to 415 limits on annual additions Are not subject to 402(g) limits

29. Excess Deferrals Governmental 457(b) Distribute as soon as administratively possible Tax Exempts Distribute by April 15 of year following calendar year of excess

30. Failure to Correct Excess Deferrals Gov�t plans Future contributions subject to 457(f) & includible in gross income if not corrected by first day of plan year that begins more than 180 after notification by IRS Tax Exempts 457(b) plan becomes a 457(f) plan if April 15 deadline is missed 457(b) governmental- prior deferrals retain their eligible status, even if plan becomes a 457(f) plan No corrections available for 457(b) of tax exempt after April 15 deadline has passed. 457(b) governmental- prior deferrals retain their eligible status, even if plan becomes a 457(f) plan No corrections available for 457(b) of tax exempt after April 15 deadline has passed.

31. Funding 457(b) governmental plans Assets must be held in trust Annuity contracts or custodial accounts used in lieu of trust May be held in group trust No federal requirements - check for state law restrictions on investments Not subject to the incidental benefit rule on life insurance; Must be held in a custodial account or trust; life insurance cannot be part of an annuity contract Life Insurance in governmental 457 plan- Murky areas Trust owner and beneficiary of the insurance contracts ER has to transfer or pass proceeds to participant or beneficiary. PS 58 cost probably apply All amounts paid as death benefit are taxable including proceeds from life insurance are taxable 457(f)- unfunded-employers holds contracts to pay benefits, EE taxed when receives payments No PS 58 costs as long as employer retains all incidence of ownership; Not required to pass along contract or proceeds to participants- applies even if ee choose to purchase life insurance contracts Proceeds taxable- as they are for an eligible plan Many governments have incorporated requirements of 404( c) ;great interest in fee disclosure and investment advice. Not subject to the incidental benefit rule on life insurance; Must be held in a custodial account or trust; life insurance cannot be part of an annuity contract Life Insurance in governmental 457 plan- Murky areas Trust owner and beneficiary of the insurance contracts ER has to transfer or pass proceeds to participant or beneficiary. PS 58 cost probably apply All amounts paid as death benefit are taxable including proceeds from life insurance are taxable 457(f)- unfunded-employers holds contracts to pay benefits, EE taxed when receives payments No PS 58 costs as long as employer retains all incidence of ownership; Not required to pass along contract or proceeds to participants- applies even if ee choose to purchase life insurance contracts Proceeds taxable- as they are for an eligible plan Many governments have incorporated requirements of 404( c) ;great interest in fee disclosure and investment advice.

32. Funding 457(b) - Tax-exempts Plan is unfunded but Contributions can be held in rabbi trust Always subject to employer�s creditors Life insurance ER retains ownership of the contracts ER is sole beneficiary of contract ER not required to transfer contracts of pass on proceeds to participant or beneficiary. Life insurance ER retains ownership of the contracts ER is sole beneficiary of contract ER not required to transfer contracts of pass on proceeds to participant or beneficiary.

33. 457(b) tax exempt to 457(b) tax exempt 457 (b) government to 457(b) government plans Restrictions on transfers Individual transfers between 457 plans of same employer Terminated participant transfers assets to new employer�s 457 plan Plan to plan transfer by gov�t plan sponsor to another 457 gov�t sponsor instead of plan termination Non Taxable Transfers Some 457 plans sponsors have more than one 457, like a lot of 403(b) situations with the same problems associated with them namely tax compliance. . Non taxable, no tax reportingSome 457 plans sponsors have more than one 457, like a lot of 403(b) situations with the same problems associated with them namely tax compliance. . Non taxable, no tax reporting

34. Summary No transfers between: 457(b) gov�t plans and 457(b)plans of tax exempts 457(b) plans and 457(f) plans 457(b) and non 457 plans � 401(a), 401(k), 403(b) and IRAs) except for��.

35. Permissive Service Credit In service transfers from 403(b)/457(b) government plans to governmental defined benefit plans for purchase permissive service credits or to repay cashed out employee contributions to gov�t DB plan Permissive Service Credit Used to calculate DB benefit Credit for time not worked or �air time� or to Increase existing DB benefit for service already credited Transfer to purchase service credits may be subject to state income taxes--Hawaii since it is not a rollover�could other states follow? Transfer to purchase service credits may be subject to state income taxes--Hawaii since it is not a rollover�could other states follow?

36. Distributions-457(b) Severance from employment Age 70 � while still working Unforeseeable emergency Small account balances Distributions usually not subject to 10% early distribution tax Plan can permit in service distribution at age 70 �; Severance from employment includes termination of employment, death or retirement. Unforeseeable emergency More restrictive definition than 401(k) hardships, no safe harbor Small account balances can be distributed to while participant is still working provided Amount $5,000 or less No deferrals have been made to the plan in the last two years prior to distribution Severance from employment is retirement, termination of employment or death Plan can permit in service distribution at age 70 �; Severance from employment includes termination of employment, death or retirement. Unforeseeable emergency More restrictive definition than 401(k) hardships, no safe harbor Small account balances can be distributed to while participant is still working provided Amount $5,000 or less No deferrals have been made to the plan in the last two years prior to distribution Severance from employment is retirement, termination of employment or death

37. Unforeseeable Emergency More restrictive than 401(k) plans No safe harbor like 401(k) Emergency must be unforeseeable Administrators need organized way to deal with these requests; IRS looks for certifications and back-up materials for the UE. Car repairs won�t cut it. 457(f) retirement, death, disability, unforeseeable emergency Administrators need organized way to deal with these requests; IRS looks for certifications and back-up materials for the UE. Car repairs won�t cut it. 457(f) retirement, death, disability, unforeseeable emergency

38. Permitted among 401,403(b), 457(b) gov�t plans and IRAs. Not permitted for 457(b) plans of tax-exempts or 457(f) plans Must account for roll-ins separately Roll-ins from 401, 403(b), 457 or IRAs to 457 treated as 401 money and may be subject to 10% early distribution tax when distributed from the 457 plan Rollovers Plan can have a provision that permits distribution from rollover account prior to a plan access event Does not apply to money moved in a non taxable transfer; Important to be able to distinguish between rollovers and non taxable transfers Set up two rollover accounts- one for 457 roll-ins and one for non 457 roll-ins Plan can have a provision that permits distribution from rollover account prior to a plan access event Does not apply to money moved in a non taxable transfer; Important to be able to distinguish between rollovers and non taxable transfers Set up two rollover accounts- one for 457 roll-ins and one for non 457 roll-ins

39. Rollover Trap Rollover to a non 457(b) plan 457 rollover may be subject to 10% early distribution tax when distributed from new plan Set up two rollover accounts-one for 457 roll-ins and the other for non 457 roll-ins Lump sum distributions from gov�t DB to public safety officers, age 50 and older not subject to 10% early distribution tax, but May be subject to 10% tax when rolled into a 457 plan and then distributed from a 457 plan prior to age 59 �. Most common distribution question. Would also happen if rolled into IRA or 401(k).Most common distribution question. Would also happen if rolled into IRA or 401(k).

40. Non Spousal Rollovers Apply to governmental 457(b) plans Required to be offered beginning in 2010 402(f) notice required 20% mandatory withholding applies Direct rollover to an inherited IRA

41. Required Minimum Distributions Apply to all 457(b) plans Gov�t 457(b) plans required to make good faith attempt to comply with RMD rules RMD waiver for 2009 applies to only to gov�t 457(b) plans Follow same RMD rules as qualified plans Follow same RMD rules as qualified plans

42. Other Distributions QDROS Mandatory rollovers $3,000 annual exclusion from gross income for premiums payments to health plan or long term care insurance contract from governmental 457(b) plan for retired public safety officers Distributions to active duty military personnel Plan Termination PTO

43. Loans Governmental 457(b) - Permitted Tax exempt 457(b) �Not Permitted 457(f) �Not Permitted Loan rules are basically the same rules as for qualified plan plans under IRC 72(p)Loan rules are basically the same rules as for qualified plan plans under IRC 72(p)

44. Taxation of Distributions- 457(b) Gov�t 457(b) - taxed when paid 457(b) Tax exempt- Taxed when paid or made available Tax exempts- Initial election to defer commencement of distributions based on terms of plan to a future date; period for making election must expire before the first time any such amounts would be considered made available under the plan. Failure to make election to defer commencement t � benefits will be considered made available and taxable to the participant or beneficiary. Additional election to defer- plan can permit participant who made initial election to defer commencement of distributions may make one additional election to defer receipt of benefits. Amounts payable to participant or been are not treated as made available because ppt/bene is allowed to make this addition deferral election. Can still make election if received prior distribution because of UE or distribution under the small account rule. Method of payment can be made at anytime before distributions begin. 457(b) � ppt can defer distribution provided distribution have not began 457(f)- may be taxable even when ppt. is not eligible for a distribution because substantial risk of forfeiture has lapsed. 457(f) Deferral taxed when made- might be advantageous before Bust tax cuts expire. Tax exempts- Initial election to defer commencement of distributions based on terms of plan to a future date; period for making election must expire before the first time any such amounts would be considered made available under the plan. Failure to make election to defer commencement t � benefits will be considered made available and taxable to the participant or beneficiary. Additional election to defer- plan can permit participant who made initial election to defer commencement of distributions may make one additional election to defer receipt of benefits. Amounts payable to participant or been are not treated as made available because ppt/bene is allowed to make this addition deferral election. Can still make election if received prior distribution because of UE or distribution under the small account rule. Method of payment can be made at anytime before distributions begin. 457(b) � ppt can defer distribution provided distribution have not began 457(f)- may be taxable even when ppt. is not eligible for a distribution because substantial risk of forfeiture has lapsed. 457(f) Deferral taxed when made- might be advantageous before Bust tax cuts expire.

45. Distribution Tax Reporting 1099-R 457(b) Governmental W-2 457(b) tax exempt & 457(f) plans

46. 457(f) Plans-Ineligible Plans For gov�ts & tax exempts Contributions above annual 457(b) limits For executives and high paids Contributions subject to substantial risk of forfeiture. Amounts can be taxable before participant is eligible for distribution A substantial risk of forfeiture exists if an individual�s rights to compensation is conditioned on the future performance of substantial services by that individual When SRF lapses, money is taxable even if not yet available . Participant deferrals subject to taxation at time of deferral. Okay to make participant deferrals. A substantial risk of forfeiture exists if an individual�s rights to compensation is conditioned on the future performance of substantial services by that individual When SRF lapses, money is taxable even if not yet available . Participant deferrals subject to taxation at time of deferral. Okay to make participant deferrals.

47. Taxation-457(f) 457(f) contributions may be taxed when Deferred Vested (no SRF) or Paid

48. �409A and �457(f) Applies to �457(f) plans �409A requirements in addition to 457(f) requirements �409A does not apply to �457(b) plans 457(f) plan may subject plan to taxation earlier because of interaction with 409A. No non-competes or rolling risks of forfeiture permitted under 409A. Not subject to 409A if paid out within 2 � months after the year they are no longer subject to a substantial risk of forfeiture. Earning could still be subject to 409A. Elective deferral not subject to substantial risk of forfeiture 457(f) plan may subject plan to taxation earlier because of interaction with 409A. No non-competes or rolling risks of forfeiture permitted under 409A. Not subject to 409A if paid out within 2 � months after the year they are no longer subject to a substantial risk of forfeiture. Earning could still be subject to 409A. Elective deferral not subject to substantial risk of forfeiture

49. IRC 457A and 457(f) Applies to NQDC from certain entities such as: Foreign corporations that are not subject to a comprehensive foreign income tax Hedge funds and partnerships that are tax- exempt Important for hospitals in joint ventures with partnerships Hospital pays NQDC 457(f) and 457A apply

50. Administration & Compliance Inconsistent Plan Administration Gov�t 457(b) plans have 180 days + to correct failures after notification from IRS or future contributions subject to 457(f) Prior contributions still subject to 457(b) Tax exempt 457(b) Plan becomes subject to 457(f) Existing contributions to govt 457 plan treated as eligible contributions and are not subject to 457(f). Existing contributions to govt 457 plan treated as eligible contributions and are not subject to 457(f).

51. IRS ExamsThe Big Three- Gov�t Plans Failure to follow unforeseeable emergency distribution rules - no safe harbor like 401(k)/403(b) plans In service transfers to purchase service credits in gov�t DB plans Failure to limit special 457 catch-up contributions Emergency must be unforeseeable, no UE for college tuition or first time home purchase. Car repairs don�t cut it From FSLG Report-July, 2009Emergency must be unforeseeable, no UE for college tuition or first time home purchase. Car repairs don�t cut it From FSLG Report-July, 2009

52. IRS Exams � Tax Exempts Plan makes or accepts rollovers Plan permits and makes participant loans Excess deferral not returned timely Plan of tax exempt is treated as a gov�t plan

53. Correction Programs EPCRS available to gov�t 457(b) plans on a provisional basis outside of EPCRS Nothing available for 457(b) plans of tax exempts 409A- correction programs for 457(f)? IRS looking exploring problems of tax exempts; Common problems for tax exempts Missed making distribution of an excess deferrals Rollovers Loans Other problems- small agencies think they are governmental plans but aren�t. IRS still not ruling on whether plan is governmental or tax-exempt. IRS looking exploring problems of tax exempts; Common problems for tax exempts Missed making distribution of an excess deferrals Rollovers Loans Other problems- small agencies think they are governmental plans but aren�t. IRS still not ruling on whether plan is governmental or tax-exempt.

54. For More Information� 457 Final Regulations http://www.irs.gov/pub/irs-irbs/irb03-39.pdf 457(b) Model Amendments- Gov�t Plans http://www.irs.gov/pub/irs-irbs/irb04-35.pdf Links to More Information http://www.irs.gov/retirement/article/0,,id=172437,00.html IRS Notice 2007-7 http://www.irs.gov/pub/irs-drop/n-07-07.pdf

55. Questions